Matching Pennies Equilibrium - Quant Trader Interview Question
Difficulty: Medium
Category: Probability & Statistics
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Topics: game-theory, nash-equilibrium, mixed-strategy, probability
Problem Description
Two traders, Alice and Bob, are playing a simultaneous game called "Matching Pennies." Alice chooses either Heads (H) or Tails (T), and Bob independently chooses either Heads (H) or Tails (T). If both choose the same side (HH or TT), Alice wins and Bob loses. If they choose different sides (HT or TH), Bob wins and Alice loses.
What is the Nash equilibrium mixed strategy for this game?
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